Mr. SkinneeJ, remember what I said about the “race to the bottom” in currency deval’s last year? It’s starting…now you’re probably asking yourself, “Skinnee self, why do I care about currency devaluations”? Because the minute the dollar carry trade starts to unwind, and all of those dollar shorts start covering and moving back into shorting the yen, our beloved stock market is going to get a haircut…at that point P/E’s and earnings and all of that won’t matter much…I’m not saying its the end of the world or anything, but I’d expect a significant correction…because knowing is half the battle and such…
Japan Hirano: Expect BOJ Gov, PM To Discuss Quantitative Easing
TOKYO (Dow Jones)--Japan's top government spokesman said he expects Prime Minister Yukio Hatoyama and Bank of Japan Gov. Masaaki Shirakawa to exchange opinions on the economy and to discuss the possibility of the central bank adopting a policy of quantitative easing, local media reported Monday.
The BOJ head and the prime minister will also talk about whether they share similar views on the economy, Nikkei News cited Chief Cabinet Secretary Hirofumi Hirano as saying at a press conference earlier in the day.
Actually, I never said that it would never be important. I was calling for near term price deflation due to falling demand which did happen (remember seeing gas at $1.35 exactly as I predicted?). Since that prediction, a LOT of things have happened in the USA and around the world. And with those new facts, come new feelings\predictions. That’s just how it works. I’m no “perma” anything…
Anyway, hasn’t your theory already played out? There was a pretty nice dollar short covering rally last month or so. Are you suggesting that the short of the dollar is overdone and that the dollar is actually much stronger than it appears today? It might appear that way when comparing to Japan, but how about against stronger currencies like AUD, CAD, etc? Sure, you may get a correction, but long term inflationary pressure is here to stay. It’s been going on since we left the gold standard and will continue as long as we can print money.
I don’t doubt that there will be some kind of market correction, but what would anyone expect with such a fierce rally like the one we have had for the past 8 months? From a long term perspective though any “covering rally” type of correction will be fairly short term in nature compared to the longer term outlook of the market as a whole. Besides, right now, my “long term” picks are focused on either large dividends or markets that have taken quite the beating (shipping, etc).